The Corporate Sustainability Reporting Directive (CSRD), adopted on 14 December 2022, sets out a EU framework requiring certain companies to comply with sustainability reporting and due diligence obligations. Initially, Member States were required to transpose the CSRD into national law by 6 July 2024. To allow companies additional time to prepare, the Stop-the-Clock Directive, part of the EU’s broader Omnibus package, was adopted on 15 April 2025, postponing the application of reporting obligations. Member States now have until 31 December 2025 to transpose the CSRD into national law.
In Luxembourg, Draft Law No. 8370 to transpose the CSRD was introduced on 29 March 2024 and amended on 6 May 2025 to implement the Stop-the-Clock Directive. The draft law is still under review. Therefore, reporting under the CSRD and the European Sustainability Reporting Standards (ESRS), which set out the detailed rules on how companies should report under the CSRD, remains voluntary for FY 2024.
Despite the voluntary nature of reporting in Luxembourg, the first wave of CSRD/ESRS reporting across the EU has now concluded. Both the CSSF and ESMA have issued fact-finding reports on FY2024 sustainability reports, providing valuable insights into the quality and completeness of early disclosures. ESMA has also released its European Common Enforcement Priorities (ECEP) for FY2025, signalling key areas of supervisory focus for the year ahead. These reports offer important guidance for Luxembourg issuers as they prepare for reporting in future financial years.
CSSF fact-finding on FY2024: strong adoption but room for improvement
The CSSF’s review of Luxembourg issuers preparing 2024 sustainability reports reveals strong voluntary early adoption, with approximately 60% following the full ESRS framework and around 63% obtaining limited assurance from auditors. This signals a clear commitment to sustainability reporting despite the absence of a national legal obligation at the time. The results of the CSSF's review of corporate practices can be found here.
Key areas for improvement identified by the CSSF
The CSSF identified several areas requiring improvement:
- Inconsistent connection between material topics and impacts, risks and opportunities (IROs) making it difficult for users to understand.
- Excessive number of IROs per issuer (averaging 39 per issuer) with unclear connection to material topics.
- Limited disclosure of unmitigated (gross) impacts. This prevents users from understanding the true scale of a company's adverse impacts before any mitigation efforts are considered.
- Only 26% disclosed anticipated financial effects and 58% provided time horizons, limiting forward-looking analysis.
ESMA fact-finding on FY2024: EU-wide perspective
ESMA's fact-finding exercise covered 91 issuers across 23 Member States. About 66% reported under the ESRS as mandatory following CSRD-driven amendments, while the remaining 34% voluntarily adopted the ESRS framework in Member States where the CSRD had not yet been transposed. The results of ESMA's review of corporate practices can be found here.
Around 62% of issuers met the IRO-1 objective (relating to the identification of material IROs), though many disclosures were boilerplate and lacked issuer-specific judgements.
ESMA encouraged issuers to avoid boilerplate language, map IROs to ESRS topics and sub-topics and clearly signpost entity-specific disclosures.
ESMA: ECEP for FY2025
ESMA addressed the following topics for FY 2025 ECEP in its statement:
- IFRS financial statements - issuers should transparently disclose how global tensions impact financial performance, valuations, impairments, tax assets and going concern assumptions.
- Sustainability statements (ESRS/CSRD) - issuers should clearly describe their double materiality assessment (DMA) and how material IROs were identified, ensuring disclosures are specific and not boilerplate.
- ESEF (European Single Electronic Format) Reporting - ESMA continues to identify common errors found in the Statement of Cash Flows in digital filings.
Outlook and next steps
The sustainability reporting landscape continues to evolve. With the Omnibus package potentially reshaping the CSRD’s scope and European Financial Reporting Advisory Group (EFRAG) preparing updates to the ESRS, companies must adapt to shifting requirements. The CSSF encourages issuers to stay ahead by monitoring legislative developments and refining compliance plans, while ESMA advises issuers, auditors and supervisors to integrate the findings into their FY2025 reporting cycle.
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